A Plant Manager Wants to Know How Much She Should

Multiple Choice

A plant manager wants to know how much she should be willing to pay for perfect market research. Currently there are two states of nature facing her decision to expand or do nothing. Under favorable market conditions the manager would make $100,000 for the large plant and $5,000 for the small plant. Under unfavorable market conditions the large plant would lose $80,000 and the small plant would make $0. If the two states of nature are equally likely, how much should she pay for perfect information?

A) $0
B) $25,000
C) $40,000
D) $100,000
E) $145,000